Essays on Network Analysis of Firms

Open Access
- Author:
- Lee, Kippeum
- Graduate Program:
- Economics
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- June 06, 2024
- Committee Members:
- Marc Henry, Professor in Charge/Director of Graduate Studies
Karl Schurter, Major Field Member
Edward Jaenicke, Outside Unit & Field Member
Joris Pinkse, Chair & Dissertation Advisor
Sung Jae Jun, Major Field Member - Keywords:
- R&D collaboration
Networking
Knowledge spillover
R&D investment
Common value auction
Joint bidding
Winner's curse - Abstract:
- The first two chapters examine the effect of private R&D investment on productivity, considering R&D collaborations and knowledge spillovers. While existing literature emphasizes R&D’s direct effects on innovation and cost reduction, it often neglects R&D's role in shaping collaborative networks. Investing in R&D enhances a firm's learning capacity and augments the firm's appeal as a collaboration partner. Consequently, the effect of R&D is underestimated without accounting for its role in fostering collaborations. To bridge the gap, I develop a dynamic model of a firm that internalizes its decision on whom to collaborate with and following spillovers. This framework allows R&D to improve productivity and affect the collaboration network, with varying propensities for collaborations across firms. Using the data on firm-to-firm R&D collaborations among U.S. firms from 1980 to 2001, I find the long-term effect of R&D is 16% underestimated if we ignore its subsidiary role in expanding the collaboration network. The third chapter is based on a joint work with Jimin Oh that analyzes joint bidding behaviors in oil and gas rights auctions. In a first-price common value auction, bidders tend to bid less aggressively in consideration of the winner's curse, especially when competition, limited information, or high risks are involved. Joint bidding alleviates these problems and potentially benefits a seller by relieving the winner's curse and encouraging more aggressive bidding. The analysis on joint bidding is important for a government to ban or allow joint bidding in procurement auctions with common value features. However, there is little empirical evidence of that. In this paper, we study joint bidding behavior and its impacts on bids and the winner's curse using the Outer Continental Shelf (OCS) auctions from 1954 to 1975. We provide reduced-form evidence that joint bidding leads to bid amounts 21.2% higher on average by introducing novel instruments leveraging a new dataset of firms' office addresses recorded in lease contract agreements and the history of joint bidding decisions. We further develop a structural model that allows asymmetry in bidders---joint and solo types, to analyze solo and joint bidders' winner's curse and their signal distribution for counterfactual work.